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East Timor criticises Australia over aid cut

ELEANOR HALL: East Timor's President has criticised Australia's overseas aid program AusAID for cutting funding to what he says is one of the few effective aid projects in his country.

In a letter to Australia's ambassador, Dr Ramos-Horta called for AusAID's decision to be reversed.

And he says that during his visit to Australia later this month he'll tell Kevin Rudd some home truths about what happens to a lot of the international aid money that's sent to East Timor.

Sara Everingham has our report.

SARA EVERINGHAM: Jose Ramos-Horta isn't happy with AusAID's decision to cut funding to a project run by the not-for-profit group the Peace Dividend Trust.

JOSE RAMOS-HORTA: I'm very disappointed. They could at least have consulted with people like me. They know I follow the issues here on Australian aid and other donors' aid very closely.

SARA EVERINGHAM: The President has sent a letter to Australia's ambassador to East Timor urging AusAID to reconsider. In it he says the Peace Dividend Trust's marketplace project stands out because unlike most donor funded projects it produces tangible results, is creating jobs for the East Timorese and is helping East Timor's economy develop.

In this interview with the Timorese newspaper Tempo Semanal he says it's money well spent.

JOSE RAMOS-HORTA: So AusAID in supporting this was doing a great job. This is how Australian taxpayers' money can really have an impact.

SARA EVERINGHAM: The project aims to steer foreign aid funds directly into the Timorese economy and to reduce the amount spent on international companies and consultants.

The founder of the Peace Dividend Trust Scott Gilmore says in three years $16 million has been redirected to poor Timorese entrepreneurs.

SCOTT GILMORE: So for example right now when an international company or the UN issues a tender for contract we translate that and distribute it to Timorese companies.

And then perhaps most importantly we work in the poorest rural areas helping any international agency that happens to be operating out there to buy their food and water locally, any goods they might need, as opposed to having it brought in from overseas or buying it in the capital of Dili.

SARA EVERINGHAM: Australia has spent about $600,000 on the project since August last year. Australia is the largest donor to East Timor and was the largest donor to this project.

Without AusAID's support Scott Gilmore says the project is likely to shut down next month.

A spokeswoman for AusAID says Australia's aid to East Timor is focused on areas of greatest need such as health and that difficult decisions have to be made when allocating finite resources.

But last month the Australian Government said it would review the use of foreign advisers and Dr Ramos-Horta says the marketplace project is in line with Australia's aid priorities.

JOSE RAMOS-HORTA: Australia had made as one of the commitments to inject more money in rural development, in rural communities.

The Peace Dividend Trust is the best channel so far that I know of in this regard that would match Australian alleged priorities and would put more money in rural development.

SARA EVERINGHAM: Jose Ramos-Horta will visit Australia this month. In his letter to the Australian ambassador he says he'll be asking the Prime Minister Kevin Rudd to focus on programs that help the Timorese people.

He says for too long consultants have been the main beneficiaries of AusAID's generosity to East Timor.